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How the places that supply oil to Cascadia are reacting to the pandemic
Oil markets went wild this spring. When the economic distress of coronavirus lockdowns hit, oil futures jumped well into negative pricing territory and oil company stock prices fell radically. The situation was so grim that pipeline operators were actually telling oil companies to stop producing because there was nowhere left to store all since no one wanted to buy.
Now, at the years’ mid-point and economies begin to show some signs of recovery, it’s worth surveying the likely impacts on workers and regional economies.
Alberta is an oil-producing heavyweight, responsible for more than 80% of total Canadian production.
Even though Alberta’s oil industry is relatively stable, the downturn in oil markets has already taken a toll, with oil production down 13% from a year ago. Many industry observers argue that Canada is facing serious long-term challenges because it is an intrinsically high-cost producer and oil is likely to sell for relatively low prices over the coming years.
In other words, the problem is no longer that there’s no way to move the product, it’s that there aren’t enough buyers, at least not at the prices needed to make a profit.
It is extremely difficult to predict how energy markets will respond over the long term to the economic and public health crises, though it is possible to make some speculations. The International Energy Agency (IEA) predicts that global oil consumption will not return to pre-crisis levels for at least two years, an outlook that agrees with the US Energy Information Administration’s forecast that domestic oil production will decline in both 2020 and 2021.
Plus, there are outstanding questions about the sustainable electric vehicle market growth, the trajectory of power grid emissions, and the growth in plastics manufacturing. What seems to be clear, however, is that economic strategies based on oil are unwise bets for the future since they are facing the global turn on more sustainable and environmentally friendly productions.
The Certified Sustainability (CSR) Practitioner Program, Leadership Edition 2020, October 7, 8 and 9, DIGITAL VERSION teaches participants on how to think ahead and adapt to the ever-changing energy environment. Learning and staying ahead of the game are the best tools in tackling any type of crisis.
